Mihir Bose: Why democracy may be a problem for FIFA reform

Now you may not readily think that democracy can be a hindrance to reform. To suggest that seems absurd. Yet in the case of FIFA that is indeed the stumbling block. Democracy is undoubtedly the best way to run things but the one person, one vote idea can have pitfalls as the working of FIFA demonstrates so vividly.

I say this because hard as it is to believe FIFA, in comparison with many other organisations including the United Nations, to which it is often compared by Sepp Blatter, is much more democratic. So while the main UN body, the general assembly, works on the principle of one nation, one vote it is essentially a debating chamber, whose decisions have no international sanction and are often ignored by nations. The body with real power is the Security Council and this could not be less reflective of the modern world. For who are its five permanent members with veto powers? They are the US, Russia, China, Britain and France.

Look at that list again. No Germany, no Japan, no India, no country from south America or Africa or the Middle East? Now we know why this is so. It reflects the political world of 1945 and the map drawn up the victors of the second world war. Britain and France then were global powers with huge empires which they had no desire to relinquish and which nobody in 1945 anticipated disappearing in little over a decade. These two colonial countries were only forced to give up their empires as a result of the unexpected and revolutionary changes the Second World War brought. True noises keep being made about reforming the Security Council but it is clear there is little prospect of that happening. Would Britain or France give its prized seats to accommodate Germany, Japan, let alone India or Brazil? Not a chance.

In contrast in FIFA the ultimate authority is with the Congress where each national association, whatever its size or football pedigree, has one vote, be it the Solomon Islands, Trinidad and Tobago, Brazil or England. That sounds perfect but the problem with one person, one vote is there is no guarantee the majority will come up with what is felt to be the right answer, let alone the answer you want. Elections in many countries where democracy has been introduced demonstrate that. Blatter knows this power of the democratic vote and has exploited it brilliantly during his 16 years as President. And his hold over this vote makes him confident that should he stand again, as he almost certainly will, he will ride out any challenge, even the one presented by UEFA.

Ironically, the two glaringly non-democratic elements in FIFA’s governance structure benefit the British and they would be very loath to give it up. This is that Britain is the only country which has four votes in FIFA, as there is no British football association but an English, Scottish, Welsh and Northern Irish one. How Britain would love to have four votes in the UN. Imagine what a boon four votes in the EU could be for David Cameron. But we know world politics does not work like that but football politics at FIFA does.

It is interesting to recall that when the UN was formed in 1945 Joseph Stalin wanted a similar status for the USSR, claiming that the Soviet republics should have a vote each. Stalin did not get his wish but the British home nations, which were returning to FIFA at about the same time as the UN was formed, made sure one country translates into four football votes. In addition the four home countries get a permanent vice President on the FIFA executive. In other words the four British home nations constitute a special electorate when it comes to voting for a seat on the executive. None of the other 205 national associations have such a privilege. And to complete this picture of special British electoral privileges IFAB, the body that decides the laws of the game and rules on issues such as goal line technology, is composed of equal representation from FIFA and the four British home nations. All sorts of reasons can be given for these special privileges but they can hardly be described as democratic.

We all know the historic reasons which led to this unique situation. In effect FIFA, broke as a result of the war, were willing to “bribe” the British to return to FIFA. The British had never cared for FIFA, shunned it when it was formed, floated in and out of it before the war and did not take part in the first three World Cups. Now FIFA wanted British help and were willing to pay any price.

Interestingly, Blatter has always been the greatest defender of these very undemocratic British privileges whenever they have come under attack. However should the Europeans really mount a challenge to him and smarting from what he has called the most disrespectful behaviour he had ever received at the hands of UEFA, where FA chairman Greg Dyke attacked Blatter for branding the British press as racist, the Swiss may turn into a democratic campaigner and call for removing these rights to ensure FIFA becomes truly democratic. UEFA will not like that as the British privileges also bolster UEFA giving the European confederation four more votes. A permanent British seats means UEFA have eight seats on the executive, a sizeable block in a 24 person executive and twice as many as any of the other confederations. Also a British vice President means the Europeans always have two FIFA vice Presidents, double the number for the other confederations.

All this is worth mentioning because in the endless debate about democracy and accountability in FIFA this is often ignored and many in Britain do not even know about it. I remember once mentioning it to Jeremy Paxman in a Newsnight debate and he just could not believe it.

Now assuming no one wants the special, undemocratic, British privileges to go, certainly no one in Britain, then how do we change FIFA which will keep the democratic structure of its Congress but have at the executive level a system which essentially bypasses the problems presented by one association, one vote? And this is where the recent proposals of the Institute of Directors, which is popularly known as the British bosses’ unions – it is based in London’s Pall Mall – are interesting. Simon Walker, Director General of the IoD feels that with FIFA having suffered repeated allegations of bribery and corruption it is time for major reform. And the reforms the IOD are proposing are far reaching:

– Transform its Executive Committee into a modern board of directors, containing a significant number of independent board members directly elected by the FIFA Congress.

– Replace the role of President with two separate positions of Chairman and CEO, as is the norm for large multinational organisations.

– Undertake a wide-ranging review of FIFA’s key processes and policies, including those relating to World Cup hosting decisions.

As Walker puts it: “Cushioned by the large amounts of money that flow around world football, and hiding behind its unaccountable and dysfunctional governance structure, FIFA has resisted change for far too long. Most other sporting bodies have massively improved their governance and decision-making. By contrast, the sport’s most important decision-making body seems to remain befouled by corruption. By embracing rather than rejecting fundamental reform, FIFA has the opportunity to become a beacon of best practice in global sports governance, rather than an increasingly derided pariah.”

Whether he includes British privileges as part of the “dysfunctional governance structure” that needs to go is not clear. If he does I wonder how his British membership would react to that. However even if he does not want reform to go quite that far, and is eager to let the British enjoy their very special undemocratic status, his proposals need to be looked at.

They need to be looked at because the companies that are his members show how you can use democracy to ensure a small group always controls things and this group can be used as an instrument of much needed change. Now in theory a joint stock company is the most democratic of bodies. Every shareholder has one vote and in a general meeting shareholders can, in theory, vote the board out. But that is theory and rarely happens in practise. Indeed there was a time when in small, “closed” companies the directors could even refuse to register a new shareholder if they thought he or she would threaten their hold on the company. This happened when Irving Scholar tried to buy Tottenham, then a private limited company. He got round this by buying not the shares but the proxies of the existing small shareholders and then used these proxies to vote the board off.

And there also used to be dual shares, A and B shares, with A shares having more votes. But those days of undemocratic corporate governance have gone although they still exist in New York. This explains why the Glazers floated Manchester United not at the more logical place, the London Stock Exchange, where United had been listed for nearly two decades, but New York. The Glazers wanted to have their cake and eat it: float and still retain control. In contrast to London, New York allows two classes of shares. Glazers could have ten votes for every one of their shares while public investors got one. New York also allowed the Glazers to have a board of family members and friends like Robert Leitao of Rothschild, a crucial player when Glazers bought United.

But even in London corporate democracy has its limits and in practise the corporate world neutralises the power of the ordinary shareholder in the way the power of the FIFA Congress with one association, one vote cannot be.

In most large companies the bulk of the shares are owned by big institutional investors and it is their views and not that of Joe Public with his few votes that matter. Nobody who has been to annual shareholders meetings, and I have been to many and reported on quite a few, can be in any doubt that all the decisions have been made before the meeting is even held. Indeed the board knows the proxy votes even before the chairman calls the annual meeting to order. Shareholders gathered at the annual meeting do vote but this is merely a formality as the board has already secured a majority on all the issues including re-election of directors.

The meeting provides the few individual shareholders, who are a bit like the corporate world’s train spotters, an opportunity to meet the board members face to face, ask the odd question and then go away very happy with the lunch that has been provided. As often as not, particularly if it is a retail company, they go away with a goody bag of the company’s products. If the board is to be challenged then the institutional investors will do the challenging. But this is usually done behind closed doors long before the annual general meeting. When some institutions flout this unwritten rule the directors get very angry, as has happened with the recent unrest over the excessive salaries awarded to the chief executive of some companies.

And it could be argued that corporate culture has managed to reform itself over the years because the corporate world is not truly democratic. The question for FIFA is how can it maintain the holy grail of one country, one vote, the British apart, and still reform. There is no simple answer to that and just abolishing the President’s office is not quite the answer. There is however merit in some of the other proposals of the IOD and we certainly need a debate on the role of the President.

Should he be the chief executive officer, as Blatter has made the post into? Or should he be more the non-executive chairman with a high powered professional executive team reporting to him and the board. And how should the board be elected? By the various confederations as at present, which contributes to it being dysfunctional, or by the entire Congress? Also how many non executive members should be on the board? These are questions that need to be debated by all of FIFA if the reform process is not to prove mostly talk that leads to no real, lasting, change.

Mihir Bose was the first sports editor of the BBC. He has worked for various media outlets and launched the Inside Sport column for the Daily Telegraph. Now a freelance journalist he has written 28 books. His latest book: Game Changer: How the English Premier League Came to Dominate the World was published by Marshall Cavendish for £14.99. Follow Mihir on Twitter @mihirbose